Bachmann’s latest invention: Obama has nationalized 51% of the economy

Michele Bachmann must have missed her calling: instead of becoming a fiction writer, she took to politics.

Though the two professions do have some overlap, namely incremental story-telling methodologies, Bachmann seems like an individual who’d do much better spinning a web of complete fantasy as opposed to tying rhetorical inventions to anything containing an element of truth.

As many fantasy enthusiasts have discovered, facts can be sticky things.

Take, for example, Bachmann’s Sunday appearance on right-wing message outlet Fox News. Speaking to television personality Chris Wallace, the Minnesota Republican congresswoman claimed that under President Obama the U.S. government had absorbed 51 percent of the nation’s private economy, thereby, in Bachmann’s mind, validating her claim that Obama has “anti-American” tendencies. (Photograph at right by Michele McGaughey.)

Her claim about the economy is, of course, wildly untrue.

“Bachmann says ‘we’ve gone from 100% of the private economy being private’ to now the United States ‘owns or effectively owns’ 51% of the private economy,” scoffed Jason Linkins, writing Huffington Post’s Sunday talk show roundup. “This is what’s called, ‘complete bullshit.'”

In her spiel, the Minnesota Republican claims that “the policies of the last 15 months” have resulted in government usurping control of home mortgages, big banks, auto-makers and the whole health care industry.

“If you add all that up, Chris, that’s 51 percent of the private economy that the federal government now owns and controls,” she said. “Those are the policies that I’m concerned about. We don’t want the federal government owning or controlling private industry.”

To his credit, Wallace did offer a mild correction to the congresswoman’s extended misstatement: that it was a Republican, President George W. Bush, who bailed out the banks and rescued failed insurer AIG, not President Obama.

Bachmann’s response of, “That’s right; that’s unfortunate,” did not seem to alter the forcefulness of her claims about President Obama, even though the lion’s share of her complaint does in fact belong with her own political party.

Her insistence that President Obama has nationalized the banks and other institutions is fundamentally incorrect. None of the major economic steps taken by the president have involved nationalization: a fact the Obama administration was lauded for in the face of the largest financial crisis since the Great Depression.

Martin Baily, who chaired the Council of Economic Advisers during the Clinton administration, spoke to Business Week recently and characterized Obama’s actions as such:

A lot of people on the left were urging them to nationalize banks. Instead they injected capital, and now they’re pulling capital out. That looks more like Rubinomics than a set of socialist or left-wing economic policies.

“On the one hand, [the bailouts are] not nationalization because [the government] didn’t buy common stock with voting rights, so they don’t have a seat at the table,” a senior Yale economics lecturer told NPR in the final months of the Bush administration. “[But the] government has all sorts of ways to influence a bank without owning shares in it.”

This resulted in the U.S. offering to bail out banks by purchasing some of their assets, but not becoming a controlling member. According to The New York Times, by the beginning of 2009 the government owned six percent of Bank of America and 7.8 percent of Citigroup: far from nationalization and amounting to nowhere near 51 percent of the nation’s economy.

The Congressional Budget Office adds: “Because the financial system is stabilizing, CBO anticipates that the federal outlays recorded for programs to aid that sector of the economy will fall in 2010. Many financial institutions that received federal assistance through the TARP have already repaid their funding, and it appears that the program will not use the full $700 billion authority it was originally granted to buy so-called troubled assets. As a result, total outlays over the life of the program are now expected to be substantially lower than previously anticipated.”

Furthermore, Bachmann’s suggestion that “anti-American” tendencies held by Obama led to the feds rescuing teetering financial institutions is also false, in that nationalizing land, assets and resources has been carried out repeatedly in U.S. history.

“The truth is that the United States has a long and overlooked history of ‘nationalization,’ starting with the Northwest Ordinance of 1789, and then the Louisiana Purchase of 1803,” Newsweek noted. “Both acts put vast amounts of American territory in the public domain, at a time when land was far more valuable than currency. Even today, a third of all the land in the United States is still publicly owned, as are the continental shelves along our coasts, the airspace above us, not to mention hundreds of thousands of miles of roads and trillions of dollars’ worth of other public infrastructure so essential to our private economy.”

During her Fox News appearance, Bachmann also claimed that President Obama wants a “value-added tax” which may amount to a national sales tax. This is also not true. Though such a suggestion was raised by one of the president’s economic advisers, Obama had made no public statements and taken no legislative action on the proposal at time of this writing.

About the Author

Stephen C. Webster is the senior editor of Raw Story, and is based out of Austin, Texas. He previously worked as the associate editor of The Lone Star Iconoclast in Crawford, Texas, where he covered state politics and the peace movement’s resurgence at the start of the Iraq war. Webster has also contributed to publications such as True/Slant, Austin Monthly, The Dallas Business Journal, The Dallas Morning News, Fort Worth Weekly, The News Connection and others. Follow him on Twitter at @StephenCWebster.